08-09-2014, 03:53 PM
(10-08-2014, 04:24 AM)starcraft_76 Wrote: Ying Li touched the low of 24cts and is currently around 25cts. Any taker?
While the current price look attractive as CEL invested @ 26cts. However, the CEL deal included some sort of loan / bond issued with attractive interest return.. so, it might not be right to assume that the price now is interested using 26cts as yardstick?
Take note that there are two issues here :
1. First, S$100 million of placement shares offer to China Everbright at 26¢ per share, which is a significant discount to the Ying Li's NAV / share.
This is the smaller issue here.
2. Secondly, there are S$185 million worth of Convertible Securities to be issued to China Everbright.
The details of the coupon rate is shown here :
http://infopub.sgx.com/FileOpen/Ying_Li_...eID=303258
1st year to 3rd year: 8.75%
4th year to 5th year: 9.5%
After 5th year(2): 9.5% + 5.0% + 5-year US Treasury Rate
Take note that the interest rate of the first 5 years is relatively high compare to bank loan, and the interest rate after 5th year is amount to loan sharK rate ! (大耳窿 )
Although this deal can help Ying Li to relief the immediate cash flow shortage, they will be in deep deep Sh** if they cannot redeem the convertible securities after 5 years.
In my personal opinion,
this deal is very good for China Everbright but very bad for Ying Li.
It's like drinking poison to quench the immediate thirst !